In The Lonely Bull

Last week the Bull indicated that the U.S. stock market could be setting-up for a breakout to the upside; not yet.  Money flows are still quite positive, but a spike in world oil prices as a result of the attack on Saudi Arabia’s facilities, put a temporary damper on expectations for economic growth.  Higher oil prices are an additional tax on everyone as the increases tend to get incorporated into prices for a wide swath of goods and services.  However, oil prices soon moderated because the Saudi oil outage is predicted to be short-lived.

The Federal Reserve, as expected, lowered the Fed-Funds rate by a ¼%.  Investors applauded and expect lower rates to cushion some economic slowing.  Growth is now expected to continue, if only at a more moderate rate.  Profitability, the key to corporate valuations, should continue to be strong and resume growing.

So, no breakout from the almost two-year trading range, but it may be imminent.  Strong money flows, lower interest rates, continuing economic expansion, and a world awash in liquidity bode well for higher stock prices.  Stay steady my friends.

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